NOTES ON MICRO ECONOMICS
WHAT IS SCARCITY? WHAT DO YOU MEAN BY ABSOLUTE SCARCITY?WHY IS IT A PROBLEM,AND HOW DOES IT CAUSE PROBLEM OF CHOICE ?
SCARCITY IS A SITUATION WHERE IN THE RESOURSES AVAILABLE FOR THE SATISFACTION OF OUR WANTS ARE LESS THAN THE RESOURSES REQURIED FOR THE SATISFACTION OF OUR WANTS.
OR
SCARCITY IS A RELATIVE CONCEPT .IT IS ALWAYS STUDIED WITH REFRENCE TO OUR UNLIMITED WANTS WHILE THE MEANS OF RESOURSES OUR LIMITED.
IMPORTANTT NOTE:
SCARCITY CAUSES PRICE: Scarcity Causes Price, Grater the scarcity of a thing higher is its market price .Zero Scarcity would mean Zero Price.
WHY IS SCARCITY A PROBLEM?
Scarcity is a problem because Recourse is scarce in relation to our wants. It is also because resources have alternative uses.
Problem Of Scarcity Causes Problem of Choice:
As the resources are scarce and have alternative uses, the problem of Choice arises.
Problem of choice is also called/or is also known as the Problem of Allocation of resourses to Alternative uses.
Wednesday, July 23, 2008
Wednesday, July 2, 2008
Goal of India’s development plans
I) Economic system adopt by India after independence
1. There are three main types of economic systems:
i) Capitalist economy
ii) Socialist economy
iii) Mixed economy
2. Every economic system has to answer the following three questions:
i) What goods or services should be produced
ii) How should goods or services be produced. Whether they should be produced by labour intensive technique or capital intensive technique.
iii) For whom should the goods and services be produced.
3. Capitalist economy
* What? In this economic system, people produce goods that others demand in order to sell or exchange for a profit.
* How? The answer to the question how to produce depends on the relative factor prices.
* Whom? In this type of system goods are distributed on the basis of purchasing power.
4. Socialist economy
*What? In a socialist economy the government decides what goods are to be produced.
*how? Technique of production is also chosen by the government
* Whom? Distribution of goods is based on the need of the people not on the bases of purchasing power.
5. Mixed economy
* A mixed economy is a combination of capitalism and socialism wherein both private and public sector co-exist
*What? The private sector will produce what they can produce and the government will provide those essential goods which the private sector fails to provide
I) Economic system adopt by India after independence
1. There are three main types of economic systems:
i) Capitalist economy
ii) Socialist economy
iii) Mixed economy
2. Every economic system has to answer the following three questions:
i) What goods or services should be produced
ii) How should goods or services be produced. Whether they should be produced by labour intensive technique or capital intensive technique.
iii) For whom should the goods and services be produced.
3. Capitalist economy
* What? In this economic system, people produce goods that others demand in order to sell or exchange for a profit.
* How? The answer to the question how to produce depends on the relative factor prices.
* Whom? In this type of system goods are distributed on the basis of purchasing power.
4. Socialist economy
*What? In a socialist economy the government decides what goods are to be produced.
*how? Technique of production is also chosen by the government
* Whom? Distribution of goods is based on the need of the people not on the bases of purchasing power.
5. Mixed economy
* A mixed economy is a combination of capitalism and socialism wherein both private and public sector co-exist
*What? The private sector will produce what they can produce and the government will provide those essential goods which the private sector fails to provide
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